Hycroft Mining (ANV) 10-Q 2011 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-33119

ALLIED NEVADA GOLD CORP.

(Exact name of registrant as specified in its charter)

DELAWARE	20-5597115
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
9790 Gateway Drive, Suite 200 Reno, NV	89521
(Address of principal executive offices)	(Zip Code)

(775) 358-4455

(Registrant’s telephone no., including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

89,215,938 shares of Common Stock, $0.001 par value, outstanding at May 4, 2011

ALLIED NEVADA GOLD CORP.

FORM 10-Q

For the Quarter Ended March 31, 2011

INDEX

PART I - FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES	20
PART II – OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	22
ITEM 1A.	RISK FACTORS	22
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	22
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.	MINE SAFETY DISCLOSURE	22
ITEM 5.	OTHER INFORMATION	23
ITEM 6.	EXHIBITS	23
	SIGNATURES	24

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALLIED NEVADA GOLD CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(US dollars in thousands, except shares)

	(Unaudited)
	March 31, 2011			December 31, 2010
Assets:
Cash and cash equivalents	$	321,080		$	337,829
Inventories - Note 3		10,818			9,978
Ore on leach pads - Note 4		55,400			49,357
Prepaids and other		7,364			7,405
Deferred tax asset, current		4,646			4,655
Current assets		399,308			409,224
Plant and equipment, net - Note 5		80,320			66,081
Mine development costs - Note 6		25,801			18,874
Restricted cash - Note 7		18,935			15,020
Other assets, non-current		2,237			2,292
Mineral properties - Note 8		35,478			35,522
Deferred tax asset, non-current		20,302			20,339
Total assets	$	582,381		$	567,352
Liabilities:
Accounts payable	$	15,115		$	14,924
Amounts due to related parties		10			7
Other liabilities, current - Note 9		1,718			1,732
Capital lease obligations, current - Note 10		5,342			3,215
Asset retirement obligation, current - Note 11		463			463
Current liabilities		22,648			20,341
Capital lease obligations, non-current - Note 10		19,334			11,104
Asset retirement obligation, non-current - Note 11		6,255			6,303
Other accrued liabilities non-current - Note 12		9,782			6,850
Total liabilities		58,019			44,598
Commitments and Contingencies -Note 19
Shareholders’ Equity:
Common stock - Note 13 ($0.001 par value, 100,000,000 shares authorized, shares issued and outstanding: 89,019,053 at March 31, 2011 and 88,958,989 at December 31, 2010)		89			89
Additional paid-in-capital		584,781			583,354
Accumulated deficit		(60,508	)		(60,689	)
Total shareholders’ equity		524,362			522,754
Total liabilities and shareholders’ equity	$	582,381		$	567,352

The accompanying notes are an integral part of these statements.

1

ALLIED NEVADA GOLD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(US dollars in thousands, except shares and per share amounts)

	Three months ended March 31,
	2011			2010
Revenue -Note 14	$	31,926		$	23,459
Operating expenses:
Cost of sales (excludes depreciation, amortization, and accretion)		12,487			8,767
		19,439			14,692
Stripping costs		650			517
Depreciation and amortization		1,558			1,278
Exploration and land holding costs		8,060			3,851
Accretion		112			110
Corporate general and administrative		8,701			3,712
Income from operations		358			5,224
Interest income		15			12
Interest expense		(156	)		(95	)
Net foreign exchange gain		34			71
Other income		6			269
Income before income taxes		257			5,481
Income tax expense - Note 15		(76	)		(1,827	)
Net income	$	181		$	3,654
Earnings per share:
Basic:
Weighted average number of shares outstanding		89,297,423			74,090,347
Income per share - Note 16	$	—		$	0.05
Diluted:
Weighted average number of shares outstanding		90,787,927			76,223,649
Income per share - Note 16	$	—		$	0.05

The accompanying notes are an integral part of these statements.

2

ALLIED NEVADA GOLD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(US dollars in thousands)

	Three months ended March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	181		$	3,654
Adjustments to reconcile net income for the period to net cash provided by operating activities:
Depreciation and amortization		1,558			1,278
Accretion		112			110
Stock-based compensation		4,084			1,951
Gain on disposal of assets		(6	)		—
Gain on recognition of deferred income		—			(269	)
Change in operating assets and liabilities:
Inventories		(849	)		(1,999	)
Ore on leach pads		(4,739	)		(5,059	)
Prepaids and other assets		(759	)		(409	)
Deferred tax asset		46			1,614
Accounts payable and amounts due to related parties		194			239
Asset retirement obligation		(161	)		—
Accrued liabilities and other		785			(268	)
Net cash provided by operating activities		446			842
Cash flows from investing activities:
Additions to plant and equipment		(5,487	)		(3,187	)
Additions to mine development costs		(7,196	)		(2,369	)
Increase in restricted cash		(3,914	)		(918	)
Proceeds from other investing activities		40			5
Net cash used in investing activities		(16,557	)		(6,469	)
Cash flows from financing activities:
Proceeds on issuance of common stock		272			322
Repayments of principal on capital lease agreements		(910	)		(328	)
Net cash used financing activities		(638	)		(6	)
Net decrease in cash and cash equivalents		(16,749	)		(5,633	)
Cash and cash equivalents, beginning of period		337,829			91,581
Cash and cash equivalents, end of period	$	321,080		$	85,948
Supplemental cash flow disclosures:
Cash paid for interest	$	244		$	95
Non-cash financing and investing activities:
Mining equipment acquired by capital lease	$	11,267		$	—

The accompanying notes are an integral part of these statements.

3

ALLIED NEVADA GOLD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(US dollars in thousands, except share amounts)

	Common Stock
	Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Equity
Balance, January 1, 2010		73,837,267	$	74	$	317,923	$	(94,817	)	$	223,180
Shares issued under stock option plans		67,756		—		322		—			322
Stock-based compensation and RSU plan share issuances		12,000		—		1,030		—			1,030
Net income		—		—		—		3,654			3,654
Balance, March 31, 2010		73,917,023	$	74	$	319,275	$	(91,163	)	$	228,186
Balance, January 1, 2011		88,958,989	$	89	$	583,354	$	(60,689	)	$	522,754
Shares issued under stock option plans		56,064		—		272		—			272
Stock-based compensation and RSU plan share issuances		4,000		—		1,155		—			1,155
Net income		—		—		—		181			181
Balance, March 31, 2011		89,019,053	$	89	$	584,781	$	(60,508	)	$	524,362

The accompanying notes are an integral part of these statements.

4

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all of the normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the operating results of a full year or of future years.

The preparation of the Company’s Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to estimates of recoverable gold in leach pad inventories; net realizable value of ore on leach pads; the valuation allowances for deferred tax assets; mineral reserves that are the basis for future cash flow estimates utilized in impairment calculations and units of production amortization calculations; environmental, reclamation and closure obligations; and estimates of fair value for asset impairments. The Company bases its estimates on various assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

These interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States and, with the exception of the new accounting pronouncements described in Note 2, follow the same accounting policies and methods of their application as the most recent annual financial statements. These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Annual Report on Form 10-K of Allied Nevada for the year ended December 31, 2010.

2. New Accounting Pronouncements

Fair Value Accounting

In January 2010, the ASC guidance for fair value measurements and disclosure was updated to require additional disclosures related to: i) transfers in and out of level 1 and 2 fair value measurements and ii) enhanced detail in the level 3 reconciliation. The guidance was amended to provide clarity about: i) the level of disaggregation required for assets and liabilities and ii) the disclosures required for inputs and valuation techniques used to measure fair value for both recurring and nonrecurring measurements that fall in either level 2 or level 3. The updated guidance was effective beginning January 1, 2010, with the exception of the level 3 disaggregation which is effective for the Company’s fiscal year beginning January 1, 2011. The adoption of this guidance did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows.

3. Inventories

The following table provides the components of inventories (in thousands):

	March 31, 2011		December 31, 2010
In-process inventory	$	6,039	$	6,159
Precious metals inventory		356		310
Materials and supplies inventory		4,423		3,509
	$	10,818	$	9,978

In-process inventory and precious metals are carried at the lower of average cost or net realizable value. Cost includes mining and process costs including mine site overhead and depreciation and amortization relating to mining and process operations. Normal stripping costs during the production phase are also included as a component of inventory. Stripping costs in excess of those considered normal are expensed as incurred. Net realizable value represents the estimated future sales price of the product based on current metals prices, less estimated costs to complete production and bring the product to sale.

Materials and supplies are valued at the lower of average cost or net realizable value. Cost includes applicable taxes and freight.

5

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

4. Ore on Leach Pads

The following table summarizes ore on leach pads and estimated recoverable gold ounces:

	March 31, 2011		December 31, 2010
Ore on leach pads (in thousands)	$	55,400	$	49,357
Estimated recoverable gold ounces		80,159		77,265

Ore on leach pads is carried at the lower of average cost or net realizable value. Cost includes mining and process costs including mine site overhead and depreciation and amortization relating to mining and process operations. Normal stripping costs are also included as a component of ore on leach pads. Stripping costs in excess of those considered normal are expensed as incurred. Costs are removed from ore on leach pads as ounces are recovered based on the average cost per estimated recoverable ounce of gold on the leach pad.

5. Plant and Equipment

The following table provides the components of plant and equipment (in thousands):

	Depreciable life or method		March 31, 2011			December 31, 2010
Mine equipment		3 -10 years	$	74,197		$	59,965
Buildings and leasehold improvements		3 - 10 years		6,003			4,410
Leach pads		Units of Production		19,094			19,094
Furniture, fixtures, and office equipment		2 - 3 years		1,112			1,049
Vehicles		3 - 5 years		1,555			1,447
Construction in progress and other				4,701			3,981
				106,662			89,946
Less: accumulated depreciation				(26,342	)		(23,865	)
			$	80,320		$	66,081

Construction in progress consists of capital items which are not yet completed and placed in service, which as of March 31, 2011, consists primarily of $1.5 million in expenditures for a maintenance building, $1.5 million in expenditures for leach pad expansion, $0.6 million in expenditures for process plant improvements, and $1.1 million in expenditures for other capital items.

Allied Nevada primarily depreciates its assets using a straight-line method over the useful lives of the assets ranging from two to ten years. The leach pads are depreciated on a units-of-production method based upon estimated recoverable gold ounces from proven and probable reserves.

6. Mine Development Costs

The following table reflects the changes in mine development costs (in thousands):

	Three months ended March 31,
	2011			2010
Balance, beginning of year	$	18,874		$	10,389
Additions:
Mine development drilling and assaying		3,186			2,058
Pre-production stripping costs		3,080			—
EIS study and engineering costs		930			311
Amortization		(269	)		(627	)
Balance, end of period	$	25,801		$	12,131

The cost of removing overburden and waste materials to access proven and probable reserves prior to the production phase of a mine are referred to as “pre-stripping costs” and are capitalized during the development of an open pit mine. Where multiple open pits exist using common processing facilities, pre-stripping costs are capitalized at each pit. Normal stripping costs are included as a component of inventory. Stripping costs in excess of those considered to be normal are expensed as incurred.

6

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

7. Restricted Cash

Allied Nevada is required to collateralize obligations related to reclamation liabilities. Accordingly, the restricted cash balances and changes during the periods are summarized below (in thousands):

	Three months ended March 31,
	2011		2010
Balance, beginning of year	$	15,020	$	14,066
Additions		3,909		909
Interest		6		9
Balance, end of period	$	18,935	$	14,984

In February 2011, we received a notification from the Bureau of Land Management (“BLM”) of a revised total reclamation cost estimate to expand mining operations and address exploration disturbances at the Hycroft Mine. This notification resulted in the Company increasing its surety bond for the benefit of the BLM by $3.9 million, which is collateralized by restricted cash in the same amount.

8. Mineral Properties

The following table summarizes the Company’s mineral properties and changes during the periods (in thousands):

	Three months ended March 31,
	2011			2010
Balance, beginning of year	$	35,522		$	35,845
Amortization - royalty rights		(44	)		(171	)
Balance, end of period	$	35,478		$	35,674

The recoverability of the carrying values of the Company’s mineral properties is dependent upon the successful start-up and commercial production from, or sale, or lease of, these properties and upon economic reserves being discovered or developed on the properties. The Company believes that the fair value of its mineral properties exceeds the carrying value; however, events and circumstances beyond the control of management may mean that a write-down in the carrying values of the Company’s properties may be required in the future as a result of evaluation of gold mineralized material and application of a ceiling test which is based on estimates of gold mineralized material, exploration land values, future advanced minimum royalty payments and gold prices. Royalty rights with a historical total cost of $3.5 million are amortized using the units-of-production method based upon estimated recoverable gold ounces from proven and probable reserves at the Hycroft Mine.

9. Other Liabilities, Current

The following table summarizes the components of other current liabilities (in thousands):

	March 31, 2011		December 31, 2010
Accrued liabilities and other
Accrued compensation	$	815	$	1,016
Contractor holdbacks		360		239
Employment taxes payable		327		397
Other		216		80
Total accrued liabilities and other	$	1,718	$	1,732

10. Capital Lease Obligations

During the three months ended March 31, 2011, the Company entered into three capital leases for the purchase of mining equipment and now has a total of thirteen capital leases, most of which have 60-month terms. The weighted average implicit interest rate for these capital leases is approximately six percent.

7

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

Assets under capital leases are included in Plant and Equipment (Note 5) and are summarized in the table below (in thousands):

	March 31, 2011			December 31, 2010
Mine equipment	$	29,079		$	17,212
Less: accumulated depreciation		(3,260	)		(2,471	)
Net assets under capital leases	$	25,819		$	14,741

During the three months ended March 31, 2011, the Company capitalized $0.1 million of interest expense from capital leases.

The following is a summary of the future minimum lease payments under capital leases, together with the present value of the net minimum lease payments as of March 31, 2011 (in thousands):

Fiscal Year	Minimum Lease Payment
2011	$	5,000
2012		6,604
2013		6,324
2014		5,552
2015		4,230
2016		292
Less: interest		(3,326	)
Net minimum lease payments under capital leases		24,676
Less: current portion		(5,342	)
Long-term portion of net minimum lease payments	$	19,334

11. Asset Retirement Obligation

Changes to the Company’s asset retirement obligation are summarized below (in thousands):

	Three months ended March 31,
	2011			2010
Balance, beginning of year	$	6,766		$	6,643
Accretion		112			110
Reclamation expenditures		(160	)		—
Balance, end of period		6,718			6,753
Less: current portion		(463	)		(476	)
Non-current portion	$	6,255		$	6,277

Reclamation obligations are secured by surety bonds or irrevocable standby letters of credit in amounts determined by applicable federal and state regulatory agencies. These surety bonds and irrevocable standby letters of credit are in turn secured by cash collateral. See Note 7 “Restricted Cash”.

12. Other Accrued Liabilities, Non-Current

As of March 31, 2011, other accrued liabilities totaled $9.8 million, of which $9.2 million was for the Company’s Deferred Phantom Unit Plan (the “DPU Plan”).

The DPU Plan was adopted by the Board of Directors in April 2009. Under the DPU Plan, non-executive directors receive a portion of their annual compensation in DPUs quarterly. Each DPU has the same value as one Allied Nevada common share. DPUs must be retained until the director leaves the Board, at which time the value of the DPU will be paid out in cash. In the event dividends are declared and paid, additional DPUs would be credited to reflect dividends paid on Allied Nevada’s common shares.

8

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

The following table summarizes the number of the Company’s DPUs and changes during the periods:

	Three months ended March 31,
	2011		2010
Outstanding, beginning of year		238,000		131,250
Granted		21,000		43,750
Outstanding, end of period		259,000		175,000

DPUs are recorded at fair value on the quarterly award date and are adjusted for changes in fair value. The fair value of amounts granted each period, together with the change in fair value, is expensed. DPU expense recognized during the three month periods ended March 31, 2011 and 2010, totaled $2.9 million and $0.9 million, respectively. The aggregate fair value of the 259,000 DPUs outstanding at March 31, 2011 totaled $9.2 million.

13. Shareholders’ Equity

Allied Nevada 2007 Stock Option Plan and Valuation of Stock Options

The Company’s 2007 Stock Option Plan and the Company’s Restricted Share Plan (the “RSU Plan”) (collectively, the “Plans”) permit 5,700,000 shares of common stock under the 2007 Stock Option Plan and 1,200,000 shares of common stock under the RSU Plan to be made available for grant or award under either the 2007 Stock Option Plan or the RSU Plan. A total of 6,900,000 shares of common stock are available under both Plans. This number is reduced by (i) the number of shares of common stock subject to restricted share rights granted and outstanding under the RSU Plan, (ii) the number of shares of common stock subject to options granted and outstanding under the Company’s 2007 Stock Option Plan, (iii) the number of shares of common stock issued upon the exercise of restricted share rights under the RSU Plan, and (iv) the number of shares of common stock issued from time to time under the 2007 Stock Option Plan.

The table below is a summary of changes to the 2007 Stock Option Plan for the periods indicated:

	Three months ended March 31,
	2011							2010
	Number of Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Number of Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)
Outstanding on January 1,		931,930		$	4.71				2,358,143		$	4.80
Canceled/expired		(2,000	)		2.43				—
Exercised		(47,500	)		4.39				(57,733	)		5.50
Outstanding, end of period		882,430			4.76		5.0		2,300,410			4.78		5.8
Exercisable, end of period		858,430		$	4.76		5.0		1,095,566		$	4.83		5.7

During the three months ended March 31, 2011 and 2010, a total of 35,001 options vested in each period. During the three months ended March 31, 2011 and 2010, the Company recognized stock-based compensation expense of $24,000 and $0.7 million, respectively, for options granted pursuant to the 2007 Stock Option Plan. At March 31, 2011 and 2010, there was approximately $19,000 and $0.9 million, respectively, of unrecognized stock-based compensation cost relating to outstanding unvested options. No options were granted in either of the three months ended March 31, 2011 or 2010.

Description of Restricted Share Plan

See “Allied Nevada 2007 Stock Option Plan and Valuation of Stock Options” for the number of shares of common stock that are reserved for issuance under the RSU Plan. A restricted share unit (“RSU”) is granted subject to a restricted period (“Restricted Period”) as determined by the Compensation Committee upon grant. A RSU is exercised automatically and a share of Allied Nevada common stock is issued for no additional consideration on the later of the end of a Restricted Period or in the case of Canadian residents, a date determined by the eligible participant that is after the Restricted Period and before a participant’s retirement date or termination date (a “Deferred Payment Date”).

9

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

The table below is a summary of changes to the Restricted Share Plan for the periods indicated:

	Three months ended March 31,
	2011					2010
	Number of RSUs			Weighted Average Remaining Restricted Period (years)		Number of RSUs			Weighted Average Remaining Restricted Period (years)
Outstanding on January 1,		957,901					827,500
Granted		239,562					190,800
Vested/issued		(196,459	)				(12,000	)
Canceled/expired		(6,000	)				(101,533	)
Outstanding, end of period		995,004			2.2		904,767			1.6
Vested, end of period		492,459			—		314,766			—

The RSU values are based upon the fair value of the Company’s stock on the date of grant, less estimated forfeitures. The restricted share units are expensed over the requisite service periods. The total stock-based compensation expense recognized under the RSU Plan during the three month periods ended March 31, 2011 and 2010 was $1.1 million and $0.4 million, respectively. At March 31, 2011 and 2010, there was approximately $12.8 million and $6.1 million, respectively, of unrecognized stock-based compensation cost relating to outstanding restricted share units.

RSUs

RSUs vest annually over three years, until fully vested on the third anniversary of the grant date. 43,300 RSUs were granted during the three months ended March 31, 2011.

Performance RSUs

Performance RSUs vest over three years and are subject to performance based vesting criteria determined in advance for each year by the Compensation Committee of the Board of Directors. 196,262 performance RSUs were granted during the three months ended March 31, 2011.

Description of Special Stock Option Plan

The Special Stock Option Plan (the “Special Plan”), was adopted by the Board of Directors in February 2007, governs the grant of stock options (the “Special Options”) to purchase shares of Allied Nevada common stock (the “Shares”), pursuant to Vista’s 2007 transfer of mining properties and related assets to Allied Nevada in exchange for Special Options. The Special Options were granted to holders of options to purchase common shares of Vista (the “Vista Options”) under Vista’s Stock Option Plan as of the closing of an Arrangement Agreement.

The table below is a summary of changes in the Special Stock Option Plan for the periods indicated:

	Three months ended March 31,
	2011							2010
	Number of Special Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Number of Special Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)
Outstanding on January 1,		26,728		$	5.28				60,138		$	4.41
Exercised		(11,564	)		5.52				(10,023	)		3.75
Outstanding, end of period		15,164			5.13		0.3		50,115			4.60		1.2
Exercisable, end of period		15,164		$	5.13		0.3		50,115		$	4.60		1.2

10

ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

Common Stock

The authorized share capital of Allied Nevada consists of 100,000,000 shares of common stock with a par value of $0.001 per share. As of March 31, 2011, there were 89,019,053 shares of common stock issued and outstanding.

Preferred Stock

The authorized share capital of Allied Nevada includes 10,000,000 shares of undesignated preferred stock with a par value of $0.001 per share. As of March 31, 2011, no shares of preferred stock have been issued.

14. Revenue

The Company recognizes revenue on gold and silver sales when persuasive evidence of an arrangement exists, the price is fixed or determinable, the metal is delivered, the title has transferred to the customer, and collectability is reasonably assured. The table below is a summary of the Company’s gold and silver sales for the three months ended March 31, 2011 and 2010 (in thousands).

	Three months ended March 31,
	2011		2010
Gold Sales	$	29,907	$	22,604
Silver Sales		2,019		855
Total	$	31,926	$	23,459

15. Income Tax Expense

Allied Nevada accounts for interim income taxes in accordance with ASC 740. For the three months ended March 31, 2011, Allied Nevada recorded an estimated tax expense of approximately $0.1 million, based on an effective rate of 29.4%. Estimated tax expense during the same period of 2010 was $1.8 million based on an effective tax rate of 33.3%. The effective tax rate for 2011 is different than the United States statutory rate of 35% primarily due to permanent differences between income tax and financial reporting treatment of certain transactions. The effective tax rate for 2010 is different than the United States statutory rate of 35% primarily due to permanent differences between income tax and financial reporting treatment of certain transactions and an increase in the valuation allowance on Alternative Minimum Tax (AMT) credits generated during the period.

16. Earnings Per Share

The following table sets forth the computation of basic and diluted income per share (in thousands, except per share amounts):

	Three months ended March 31,
	2011		2010
Net income available to common shareholders	$	181	$	3,654
Basic:
Weighted average number of shares outstanding		89,297		74,090
Income per share		0.00		0.05
Diluted:
Weighted average number of shares outstanding		90,788		76,224
Income per share		0.00		0.05

The computation of the basic income per share includes within the weighted average number of shares outstanding 492,459 and 326,766 vested restricted share units that were not issued as of March 31, 2011 and 2010, respectively.

At March 31, 2011, there were 882,430 options granted under the Allied Nevada Stock Option Plan outstanding, 15,164 options granted under the Allied Nevada Special Stock Option plan outstanding, and 695,004 unvested restricted share units outstanding that were included in the diluted income per share for the three months ended March 31, 2011.

At March 31, 2010, there were 2,300,410 options granted under the Allied Nevada Stock Option Plan outstanding, 50,115 options granted under the Allied Nevada Special Stock Option plan outstanding, and 585,800 unvested restricted share units outstanding that were included in the diluted income per share for the three months ended March 31, 2010.

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ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

17. Segment Information

Allied Nevada is currently engaged in the operation of the Hycroft Mine and the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in Nevada. The Company identifies its reportable segments as those consolidated mining operations or functional groups that represent more than 10% of the combined revenue, profit or loss or total assets of all reported operating segments. Consolidated mining operations or functional groups not meeting this threshold are aggregated at the corporate level for segment reporting purposes. Intercompany revenue and expense amounts have been eliminated within each segment in order to report on the basis that management uses internally for evaluating segment performance. Segment information as of and for the three months ended March 31, 2011 and 2010 is as follows (in thousands):

As of and for the three months ended March 31,	Hycroft Mine			Exploration			Corporate and Other			Total
2011
Sales	$	31,926		$	—		$	—		$	31,926
Income (loss) from operations		17,172			(8,059	)		(8,755	)		358
Interest income		6			—			9			15
Interest expense		(156	)		—			—			(156	)
Gain on foreign exchange		—			—			34			34
Other income		6			—			—			6
Income (loss) before taxes		17,028			(8,059	)		(8,712	)		257
Total assets		214,194			33,711			334,476			582,381
Capital expenditures		16,670			46			37			16,753
2010
Sales	$	23,459		$	—		$	—		$	23,459
Income (loss) from operations		12,821			(3,851	)		(3,746	)		5,224
Interest income		9			—			3			12
Interest expense		(95	)		—			—			(95	)
Gain on foreign exchange		—			—			71			71
Other income		—			269			—			269
Income (loss) before taxes		12,735			(3,582	)		(3,672	)		5,481
Total assets		124,537			33,594			99,711			257,842
Capital expenditures		6,267			7			32			6,306

18. Fair Value Measurements

The Company’s financial instruments, including cash and cash equivalents and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments.

Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3 –Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

As required by accounting guidance, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. During the three months ended March 31, 2011, the Company did not have any assets or liabilities measured under the fair value hierarchy.

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ALLIED NEVADA GOLD CORP.

Notes to Condensed Consolidated Financial Statements (unaudited)

19. Commitments and Contingencies

The Company is from time to time involved in various legal proceedings related to its business. Management does not believe that adverse decisions are likely in any pending or threatened proceeding, or that amounts that may be required to be paid by reason thereof will have a material adverse effect on the Company’s financial condition, results of operations, or statement of cash flows.

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ITEM 2. MANAGEMENT’S DISCUSSIONAND ANALYSISOF FINANCIAL CONDITIONAND RESULTSOF OPERATIONS

The following management’s discussion and analysis of the consolidated operating results and financial condition of Allied Nevada Gold Corp. (“Allied Nevada”) for the three month period ended March 31, 2011 has been prepared based on information available to us as of May 4, 2011. This discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herewith and the audited Consolidated Financial Statements of the Company for the year ended December 31, 2010 and the related notes thereto filed with the Company’s annual report on Form 10-K, which have been prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States. All amounts stated herein are in U.S. dollars, unless otherwise noted.

Operations

Key operating statistics for the three months ended March 31, 2011, compared with the same period in 2010, are as follows:

	Three months ended March 31,
	2011		2010
Total material mined (thousands of tons)		7,780		5,319
Ore grade - gold (oz/ton)		0.014		0.023
Ore grade - silver (oz/ton)		0.197		0.359
Ounces produced - gold		20,718		22,704
Ounces produced - silver		61,751		53,491
Ounces sold - gold		21,341		20,439
Ounces sold - silver		59,566		50,937
Average realized price - gold ($/oz)	$	1,402	$	1,108
Average realized price - silver ($/oz)	$	34	$	17
Average spot price - gold ($/oz)	$	1,386	$	1,109
Average spot price - silver ($/oz)	$	32	$	17
Cost of sales, net of byproduct credits1(thousands)	$	10,468	$	7,912
Cost of sales per ounce of gold sold1	$	491	$	387

The Hycroft Mine produced 20,718 ounces of gold and 61,751 ounces of silver in the first quarter of 2011, in-line with expectations. Per previously stated guidance, production is expected to strengthen throughout 2011 as the impact of implementing the accelerated mining plan begins to take effect. First quarter 2011 sales were slightly better than planned with 21,341 ounces of gold and 59,566 ounces of silver sold. The mine reported no safety or environmental incidents in the first quarter of 2011. Hycroft mined 7.8 million tons of material in the first quarter of 2011, including 3.0 million tons of ore at average grades of 0.014 opt gold and 0.197 opt silver. Average grades mined were lower in the first quarter of 2011, as expected, when compared with the same period in 2010 as the mine moves through a lower grade phase of the Brimstone pit. Waste tons moved in the first quarter of 2011 totaled 4.8 million tons and included 1.6 million tons of pre-strip material from a new mining area, the Cut-5 pit. The mine placed approximately 41,130 contained ounces of gold (recoverable – 23,280 ounces) and 583,100 ounces of silver (recoverable – 58,310 ounces) on the leach pads in the first quarter of 2011.

We believe that implementation of the accelerated heap leach mining expansion plan is progressing well. Expansion of the Merrill-Crowe plant to increase solution processing capacity from 3,500 gpm to 5,000 gpm began in the first quarter of 2011. Ground preparation to begin mining in a new area of Hycroft, Cut-5, began in January. Construction of a new truck shop capable of servicing the larger mining equipment is progressing as planned. To date, five of the 320-ton trucks are operating as part of the accelerated heap leach mining expansion.

Cost of sales of $491 per ounce of gold sold¹ was in-line with expectation for the first quarter. Costs are expected to decline throughout the remainder of the year to average within our previously guided range of $450-490 per ounce of gold sold. Stripping programs that began in 2010 to remove waste and allow access to an area of ore in the Brimstone pit and the new Cut-5 pit are nearing completion and should benefit costs for the remainder of the year as the waste to ore strip ratio declines below 1:1.

¹  The terms “cost of sales per ounce of gold sold” and “cost of sales, net of byproduct credits” are non-GAAP financial measures. Please see the section on “Non-GAAP Measures” in this MD&A.

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Exploration

At Hycroft, the Company completed 78,000 feet of drilling in 73 holes in the first quarter of 2011. The goal of the first quarter drill campaign was to continue infill and engineering drilling in support of the milling feasibility study, and initiate step out drilling north of Vortex (Albert Zone) and west of the Central Zone. The exploration program for the remainder of 2011 will focus on step-out drilling and property wide exploration with a goal of expanding the resource base.

At Hasbrouck, the Company drilled 41 holes in the first quarter of 2011 totaling 27,690 feet. As previously released, the Company discovered a high-grade zone at Hasbrouck, the Saddle Zone, highlighted by 585 feet grading 0.13 opt gold and 2.43 opt silver. The Company quickly began targeted drilling to begin to define and understand the magnitude of this discovery. As a result, the preliminary economic assessment, originally scheduled to be released in the first quarter has been postponed to allow for a review of these drill results and their potential impact on the envisioned operating scenario for Hasbrouck. The Company will revisit the preliminary economic assessment once it has a better understanding of the nature of the high-grade mineralization.

Results of Operations

Three Months Ended March 31, 2011 Compared with Three Months Ended March 31, 2010

Allied Nevada had net income during the three months ended March 31, 2011 of $0.2 million compared to $3.7 million during the same period in 2010. The decrease in net income of $3.5 million is largely due to an increase of $5.0 million in corporate general and administrative costs, an increase of $4.2 million in exploration and land holding costs, and an increase of $3.7 million in cost of sales compared to the same period in 2010, which were partially offset by an increase of $8.4 million in revenue from the sale of gold and silver and a decrease of $1.7 million in income tax expense compared to the same period in 2010.

Revenue

Revenue increased $8.4 million to $31.9 million compared to $23.5 million in the same period of 2010. The increase was primarily attributable to a 902 ounce increase in gold sales and a $294 increase in the average realized price for gold to $1,402 per ounce compared to $1,108 per ounce in 2010. Additionally, we experienced an 8,629 ounce increase in silver sales and a $17 increase in the average realized price for silver to $34 per ounce compared to $17 per ounce in the same period of 2010.

Cost of sales

Cost of sales consists of mining and process costs, together with normal stripping costs that are variable costs of production. Cost of sales increased $3.7 million to $12.5 million compared to $8.8 million in the same period of 2010. The increase was primarily attributable to a $156 per ounce increase in the average cost of sales per ounce sold to $585 compared to $429 in the same period of 2010. The $156 increase in the average cost of sales per ounce is primarily attributable to the decrease in the ore grade mined throughout 2010 which increased the weighted average cost of sales per ounce.

Stripping costs

Stripping costs represent costs incurred in excess of those considered to be normal and are expensed as incurred. Stripping costs increased $0.1 million to $0.6 million compared to $0.5 million in the same period of 2010. Stripping costs increased in the 2011 period due to a 262,200 ton increase in the number of waste tons mined which was partially offset by a decrease in the average cost per ton mined.

Depreciation and amortization

Depreciation and amortization expense increased $0.3 million to $1.6 compared to $1.3 million in the same period of 2010. The increase was primarily due to an increase in plant and equipment in operation. There was a $38.8 million increase in mine equipment being depreciated using the straight-line method over the useful life and a $10.7 million increase in leach pads being depreciated on a units-of-production method compared to the same period of 2010.

Exploration and land holding costs

Exploration and land holding costs increased $4.2 million to $8.1 million compared to $3.9 million during the same period of 2010. The increase is primarily due to activity for exploration and drilling programs at the Hycroft Mine and Hasbrouck, which is an Advanced Exploration Property. Hycroft drilling programs consisted of approximately 73 drill holes and 78,000 feet drilled compared to approximately 100 drill holes and 77,700 feet drilled for the same period in 2010. Hasbrouck drilling and exploration programs consisted of approximately 41 drill holes and 27,690 feet drilled compared to no drilling activity in the same period of 2010.

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Accretion

Allied Nevada recorded accretion expenses of $0.1 million during each of the three months ended March 31, 2011 and 2010. Accretion expense in the three months ended March 31, 2011 was based upon a credit adjusted risk-free rate of 6.8%.

Corporate general and administrative costs

Corporate general and administrative costs increased $5.0 million to $8.7 million compared to $3.7 million for the same period of 2010. The increase was largely due to an additional $2.1 million of stock-based compensation costs for employees and directors, an additional $1.6 million of consulting fees for engineering and metallurgical services, and an additional $0.8 million of compensation and benefit costs for employees associated with increased staffing levels at the corporate office compared to the same period of 2010.

Interest income

Allied Nevada earned a minimal amount in interest income from both our liquid savings and restricted cash accounts during the three months ended March 31, 2011 and 2010, due to low interest rate environments in both periods.

Interest expense

Interest expense increased $0.1 million to $0.2 million compared to $0.1 million during the same period in 2010. Interest expense in both periods was primarily attributable to capital lease obligations.

Other income

The Company recognized a minimal amount of other income during the three months ended March 31, 2011 compared to $0.3 million for the same period of 2010. The Company recorded no gains from recognition of advanced minimum royalties after exploration rights were returned to the Company by joint venture partners in the three months ended March 31, 2011 compared to $0.3 million in the same period of 2010.

Income tax expense

Income tax expense decreased $1.7 million to $0.1 million compared to $1.8 million in the same period of 2010. In the 2011 period, $0.1 million of tax expense represents a non-cash charge relating to a reduction of deferred tax assets. In the 2010 period, $1.6 million of tax expense represents a non-cash charge relating to a reduction of deferred tax assets for Allied Nevada’s net operating loss carryforwards and $0.2 million of tax expense represents an increase in Allied Nevada’s valuation allowance for Alternative Minimum Tax.

Net income

For the reasons described above, we reported net income of $0.2 million for the three months ended March 31, 2011 compared to $3.7 million for the same period of 2010.

Financial Position, Liquidity and Capital Resources

Cash provided by operating activities

Cash provided by operating activities was $0.4 million compared to $0.8 million during the same period in 2010. The net decrease of $0.4 million of cash provided by operating activities was primarily attributable to the following:

• The Company had $0.2 million in net income compared to $3.7 million in the same period of 2010. This amounted to a net decrease in cash provided by operating activities of $3.5 million for reasons described in Results of Operations above.

• The Company recorded a $0.1 million reduction to deferred tax assets compared $1.6 million in the same period of 2010, resulting in a $1.5 million decrease in cash provided by operating activities.

• The change in inventories resulted in a $0.8 million use of cash compared to a $2.0 million use of cash in the same period of 2010, resulting in a $1.2 million decrease in cash used in operating activities.

• The change in accrued liabilities and other resulted in a $0.8 million source of cash compared to a $0.3 million use of cash in the same period of 2010, resulting in a $1.1 million increase in cash provided by operating activities.

• The change in prepaids and other resulted in a $0.8 million use of cash compared to a $0.4 million use of cash in the same period of 2010, resulting in a $0.4 million increase in cash used in operating activities.

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Cash used in investing activities

Cash used in investing activities was $16.6 million compared to $6.5 million during the same period in 2010. The net increase of $10.1 million of cash used in investing activities is largely due to the following:

• We incurred $3.2 million in mine development costs consisting primarily of ore development drilling and related assaying costs attributable to proven and probable reserves at the Hycroft mine compared to $2.0 million of such costs incurred during the same period of 2010, which resulted in an increase in cash used in investing activities of $1.2 million.

• Pre-production stripping costs of the Cut 5 Pit commenced in the first quarter of 2011 resulting in $3.1 million of capitalized mine development costs compared to no pre-production stripping costs in the same period of 2010.

• Additions to plant and equipment totaled $5.5 million compared to $3.2 million of equipment purchases during the same period in 2010, resulting in an increase in cash used in investing activities of $2.3 million. In the three months ended March 31, 2011 the Company had cash purchases of $1.0 million for mobile mine equipment, $1.5 million for leach pad expansions, $1.5 million for truck shop construction, $0.6 million for the mill construction, and $0.9 million of other plant and equipment additions.

• The Company contributed an additional $3.9 million to its collateral account to support an additional surety bond for the benefit of the Bureau of Land Management (BLM) compared to $0.9 million of additional collateral established during the same period of 2010, resulting in an increase in cash used in investing activities of $3.0 million.

Cash used in financing activities

Cash used in financing activities was $0.6 million compared to $6,000 during the same period in 2010. The net increase of $0.6 million of cash used in financing activities is due to capital lease principal payments of $0.9 million in the first quarter of 2011 compared to $0.3 million during the same period of 2010, resulting in an increase in cash used in financing activities of $0.6 million.

Liquidity and capital resources

Based upon our current operational assumptions and mine plans, we believe our cash on hand and anticipated operating cash flow from the Hycroft Mine will be adequate to meet our liquidity needs and fund the planned capital expenditures for the next year.

We estimate our capital expenditures in 2011 will total approximately $110 million largely related to the expansion of the mobile mine equipment fleet, support building improvements, increased processing plant capacity modifications, ongoing leach pad expansion at Hycroft, capitalized stripping and drilling activities, and other capitalized spending.

At March 31, 2011, our total assets were $582.4 million compared to $567.4 million at December 31, 2010. The increase in total assets is primarily attributable to $11.3 million of plant and equipment purchased through capital leases.

At March 31, 2011, working capital was $376.7 million compared to $388.9 million at December 31, 2010. The decrease in working capital is primarily attributable to a $16.7 million decrease in cash and equivalents and a $2.1 million increase in the current portion of capital lease obligations offset by a $6.0 million increase in ore on leachpads.

At March 31, 2011, we had cash and cash equivalents totaling $321.1 million. All cash equivalents were invested in high quality short-term money market instruments, including government securities, bankers’ acceptances, bank notes, certificates of deposit, commercial paper and repurchase agreements of domestic and foreign issuers. At March 31, 2011, we had no funds invested in asset-backed commercial paper.

Off-balance sheet arrangements

Allied Nevada has no off-balance sheet arrangements.

Outlook

Hycroft Operations

In 2011, we expect Hycroft to mine approximately 40.0 million tons of material, including approximately 23.4 million tons of ore at average grades of 0.0136 opt gold. The average grades in 2011 are expected to be lower than those mined in 2010 as the mine moves through a lower grade phase of mining of the Brimstone pit. The silver to gold production ratio is expected to be 2.5 ounces of silver for each ounce of gold.

Mining equipment deliveries in connection with the accelerated heap leach plan are generally as expected. However, the catastrophic earthquake and tsunami that occurred in Japan in March 2011, and the resulting consequences, have caused the delay of the delivery of a large capacity shovel that was expected to be in operation in the second quarter of 2011. Based on current information, the Company believes that the shovel will now be operational in third quarter of 2011. While the Company believes the impact of this delay may be minimal, full year 2011 production guidance is being revised to 115,000 - 125,000 ounces of gold. It is not anticipated that the delivery delay will have an impact on previously stated cost of sales guidance of $450-$490 per ounce of gold sold¹ (with silver as a byproduct credit). While the Company expects delays to have a minimal impact on production, we are reviewing options to further mitigate any potential adverse effects to production.

¹  Allied Nevada uses the non-GAAP financial measures “cost of sales per ounce of gold sold” and “cost of sales, net of byproduct credits” in this document. Please see the section titled “Non-GAAP Measures” for further information regarding these measures.

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Production is expected to be lower in the first half of 2011 and increase through the remainder of the year as the impact of mining more tons and placing more ore begins to take effect. The overall strip ratio for 2011 is expected to be less than 1:1, being higher in the first quarter of 2011 and declining through the remainder of the year. Cost of sales per ounce of gold sold is expected to be higher in 2011 as compared to 2010 due to higher commodity price expectations, a lower grade mining phase and an increased waste mining rate as the mine continues to ramp up the oxide expansion. Cost of sales per ounce of gold sold¹ is calculated assuming a silver selling price of $22/ounce and fuel price of $100/barrel. It is expected that a $10/barrel change in the world fuel price would result in a $10 per ounce change in the cost of sales per ounce of gold sold.

Major Capital Programs

Capital expenditures in 2011 are expected to total approximately $110 million. Significant capital projects include the following: expansion of the mobile equipment fleet at Hycroft with additional 320-ton haul trucks and larger capacity shovels ($53 million); support building improvement; increased process plant capacity modifications; ongoing leach pad expansion at Hycroft ($22 million); capitalized stripping and drilling ($9 million); and other capitalized spending of approximately $26 million. We expect to lease a significant portion of the mobile equipment through capital leases.

The Company continues to implement near and long-term opportunities to increase production, reduce costs, and extend the life of the Hycroft mine. These initiatives include:

• Continued implementation of the Hycroft Accelerated Oxide Heap Leach Project: The mine has been successful in initiating the accelerated oxide heap leach plan with the addition of a crushing circuit, completion of the 2010 leach pad expansion and integration of the larger scale mining equipment. The operating plan will be to continue increasing the mining rate as new equipment is delivered throughout 2011. The goal for 2011 is to increase the mining rate to 40 million tons (from 26.5 million in 2010) and ultimately to 88 million tons by 2012. By tripling the mining rate, the mine expects to increase gold production to average over 260,000 ounces annually by 2012.

• Hycroft Milling Project development: Based on the positive results of the milling scoping studies completed in 2010, the Company intends to complete an initial feasibility study for a milling scenario to develop the most economically viable solution for extracting the large resource at Hycroft. It is currently expected that this study will be completed in the third quarter of 2011.

• Develop exploration properties: A greater emphasis will be placed on regional exploration targets and advancing potential development properties in 2011. Exploration programs have been designed for a number of other exploration properties in 2011 to follow up on opportunities identified during the 2010 field program.

Non-GAAP Measures

Allied Nevada provided the non-GAAP measures of “cost of sales per ounce of gold sold” and “cost of sales, net of byproduct credits” in this document. The Company believes that, in addition to conventional measures prepared in accordance with United States generally accepted accounting principles (U.S. “GAAP”), stakeholders use these non-GAAP measures to evaluate the Company’s performance and its ability to generate cash flow. The above non-GAAP measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. Accordingly, the above measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

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The calculations of these non-GAAP measures are presented in the table below:

	Three months ended March 31,
	2011			2010
Cost of sales (thousands)	$	12,487		$	8,767
Less: Silver revenues (thousands)	$	(2,019	)	$	(855	)
Cost of sales, net of byproduct credits (thousands)	$	10,468		$	7,912
Gold ounces sold		21,341			20,439
Cost of sales per ounce of gold sold	$	491		$	387

Critical Accounting Policies and Estimates

These interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States and follow the same accounting policies and methods of their application as the most recent annual financial statements. See Management’s Discussion and Analysis and the financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2010 for a description of our critical accounting policies and estimates.

Recent Accounting Pronouncements

Fair Value Accounting

In January 2010, the ASC guidance for fair value measurements and disclosure was updated to require additional disclosures related to: i) transfers in and out of level 1 and 2 fair value measurements and ii) enhanced detail in the level 3 reconciliation. The guidance was amended to provide clarity about: i) the level of disaggregation required for assets and liabilities and ii) the disclosures required for inputs and valuation techniques used to measure fair value for both recurring and nonrecurring measurements that fall in either level 2 or level 3. The updated guidance was effective beginning January 1, 2010, with the exception of the level 3 disaggregation which is effective for the Company’s fiscal year beginning January 1, 2011. The adoption of this guidance did not have an impact on the Company’s consolidated financial position, results of operations, or cash flows.

Note Regarding Forward-Looking Statements

In addition to historical information, this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included herein or incorporated by reference, that address activities, events or developments that we expect or anticipate will or may occur in the future, are forward-looking statements, including but not limited to such things as:

• our future business strategy, plans and goals;

• our estimated capital expenditures;

• our expansion expectations, including with respect to the Hycroft mine and Hasbrouck property;

• our expectations regarding the growth of our business, our estimates of reserves and other mineralized material;

• the economic potential of the sulfide mineralization and milling project at the Hycroft property;

• the preliminary economic assessment at the Hasbrouck property;

• the anticipated results of the exploration drilling programs at our properties;

• future gold and silver prices;

• our production estimates;

• our expectations regarding gold and silver recovery;

• our estimated future sales and cost of sales;

• the availability of outside contractors;

• our anticipated cash flows and cash operating costs; and

• the availability of additional capital.

The words “estimate”, “plan”, “anticipate”, “expect”, “intend”, “believe”, “target”, “budget”, “may”, “schedule” and similar words or expressions identify forward-looking statements. These statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any

19

results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on current expectations. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to:

• volatile market prices of gold and silver;

• risks related to the heap leaching process at the Hycroft Mine, including but not limited to gold recovery rates, gold extraction rates, and the grades of ore placed on our leach pads;

• uncertainties concerning estimates of mineral reserves, mineral resources and grading;

• cost of compliance with current and future government regulations, including those related to environmental protection, mining, health and safety, corporate governance and public disclosure;

• uncertainties relating to obtaining or retaining approvals and permits from governmental regulatory authorities;

• our ability to achieve our estimated production rates and stay within our estimated operating costs;

• the commercial success of our exploration and development activities;

• an increase in the cost or timing of new projects;

• our current intention not to use forward sale arrangements;

• the inherently hazardous nature of mining activities, including operational, geotechnical and environmental risks;

• our ability to raise additional capital on favorable terms or at all;

• intense competition within the mining industry;

• uncertainties related to our ability to find and acquire new mineral properties;

• potential operational and financial effects of current and proposed federal and state regulations related to environmental protection and mining, and the exposure to potential liability created by such regulations;

• availability of equipment or supplies;

• our ability to attract and retain personnel;

• our ability to manage our growth;

• potential challenges to title in our mineral properties;

• risks associated with the expansion of our operations, including those associated with any future acquisitions or joint ventures;

• risks that our principal stockholders will be able to exert significant influence over matters submitted to stockholders for approval;

• potential conflicts of interests that may arise though some of our directors’ involvement with other natural resources companies;

• the market price and future sales of our common stock; and

• our decision not to pay dividends.

For a more detailed discussion of such risks and other important factors that could cause actual results to differ materially from those in such forward-looking statements, please see those factors discussed in Part II, Item 1A of this Form 10-Q and in our other filings with the SEC. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that our forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. We assume no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in the market risks discussed in Item 7A of Allied Nevada’s Form 10-K for the fiscal year ended December 31, 2010.

ITEM 4. CONTROLS AND PROCEDURES

The principal executive officer and principal financial officer have evaluated the effectiveness of Allied Nevada’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of

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March 31, 2011. Based on the evaluation, the principal executive officer and principal financial officer concluded that the disclosure controls and procedures in place are effective to ensure that information required to be disclosed by Allied Nevada, including consolidated subsidiaries, in reports that Allied Nevada files or submits under the Exchange Act, is recorded, processed, summarized and reported on a timely basis in accordance with applicable time periods specified by the Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in Allied Nevada’s internal control over financial reporting during the three months ended March 31, 2011 that have materially affected, or are reasonably likely to materially affect, Allied Nevada’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company is a party to routine litigation and proceedings that are considered part of the ordinary course of its business. The Company is not aware of any material current, pending, or threatened litigation.

ITEM 1A. RISK FACTORS

In addition to the information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in I, Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2010, which could materially affect our business, financial condition or future results. There have been no material changes to the risk factors disclosed in that report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Allied Nevada considers health, safety and environmental stewardship to be a core value for the Company and received a “Sentinels of Safety” award at Hycroft for the 2008 year in 2009. Allied Nevada has a mandatory safety and health program including employee training, risk management, workplace inspection, emergency response, accident investigation and program auditing. The Company considers this program to be essential at all levels to ensure that employees and the Company conduct themselves in an environment of exemplary health, safety and environmental governance

Our operations and exploration properties are subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has also generally increased in recent years.

The following disclosures are provided pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) entered into law in July 2010, which requires certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934, as amended, that operate mines regulated under the Mine Act. Under the Act, the SEC is authorized to issue rules and regulations to carry out the purposes of these provisions. While we believe the following disclosures meet the requirements of the Act, it is possible that any rule-making by the SEC will require disclosures to be presented in a form that differs from this presentation.

Mine Safety Information.

Whenever MSHA believes a violation of the Mine Act, any health or safety standard or any regulation has occurred, it may issue a citation which describes the alleged violation and fixes a time within which the operator (e.g. our subsidiary, Hycroft Resources & Development Inc.) must abate the alleged violation. In some situations, such as when MSHA believes that conditions pose a hazard to miners, MSHA may issue an order removing miners from the area of the mine affected by the condition until the alleged hazards are corrected. When MSHA issues a citation or order, it generally proposes a civil penalty, or fine, as a result of the alleged violation, that the operator is ordered to pay. Citations and orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed. The following table reflects citations and orders issued to us by MSHA during the three months ended March 31, 2011 and pending legal actions before the Federal Mine Safety and Health Review Commission (the “Commission”) as of March 31, 2011. The proposed assessments for the three months ended March 31, 2011 were taken from the MSHA data retrieval system as of March 31, 2011.

Additional information about the Act and MSHA references used in the table follows.

• Section 104 Citations: Citations received from MSHA under section 104 of the Mine Act, which includes citations for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.

• Section 104(b) Orders: Orders issued by MSHA under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated.

• Section 104(d) Citations and Orders: Citations and orders issued by MSHA under section 104(d) of the Mine Act for unwarrantable failure to comply with mandatory health or safety standards.

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• Section 110(b)(2) Violations: Flagrant violations issued by MSHA under section 110(b)(2) of the Mine Act.

• Section 107(a) Orders: Orders issued by MSHA under section 107(a) of the Mine Act for situations in which MSHA determined an “imminent danger” (as defined by MSHA) existed.

• Pending Legal Actions: Pending legal actions before the Commission as required to be reported by Section 1503(a) (3) of the Act. The Commission is an independent adjudicative agency that provides administrative trial and appellate review of legal disputes arising under the Mine Act. These cases may involve, among other questions, challenges by operators to citations, orders and penalties they have received from MSHA or complaints of discrimination by miners under Section 105 of the Mine Act. The following is a brief description of the types of legal actions that may be brought before the Commission.

• Contests of Citations and Orders — A contest proceeding may be filed with the Commission by operators, miners or miners’ representatives to challenge the issuance of a citation or order issued by MSHA.

• Contests of Proposed Penalties (Petitions for Assessment of Penalties) — A contest of a proposed penalty is an administrative proceeding before the Commission challenging a civil penalty that MSHA has proposed for the alleged violation contained in a citation or order. The validity of the citation may also be challenged in this proceeding as well.

Mine1	Section 104 Citations		Sections 104(b) Orders		Section 104(d) Citations and Orders		Section 110(b)(2) Violations		Section 107(a) Orders		Proposed MSHA Assessments (US$)2		Mining Related Fatalities		Pending Legal Actions
Hycroft		6		—		—		—		—	$	1,546		—		—

Pattern or Potential Pattern of Violations

During the three months ended March 31, 2011, Hycroft did not receive written notice from MSHA of (a) a pattern of violations of mandatory health or safety standards that are of such nature as could have significantly and substantially contributed to the cause and effect of mine health or safety hazards under section 104(e) of the Mine Act or (b) the potential to have such a pattern.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number	Description of Document
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials are filed herewith: (i) XBRL Instance, (ii) XBRL Taxonomy Extension Schema, (iii) XBRL Taxonomy Extension Calculation, (iv) XBRL Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) XBRL Taxonomy Extension Definition. In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by the specific reference in such filing.

¹  The table above reflects citations and orders issued to us by MSHA during the three months ended March 31, 2011, and the pending legal actions before the Commission as of March 31, 2011. The definition of “mine” under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, tools, and minerals preparation facilities.

²  Represents the total dollar value of the proposed assessment from MSHA under the Mine Act pursuant to the citations and or orders preceding such dollar value in the corresponding row.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ALLIED NEVADA GOLD CORP. (Registrant)
Date: May 4, 2011	By:	/s/ Scott A. Caldwell
		Scott A. Caldwell
		President and Chief Executive Officer
Date: May 4, 2011	By:	/s/ Hal D. Kirby
		Hal D. Kirby
		Executive Vice President and Chief Financial Officer

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